From next year, companies selling electricity in the Australian state of New South Wales will be forced to reduce their greenhouse emissions. Environment groups have welcomed the decision although a national electricity industry association claims the decision is anti-competitive and won't work.

Under the new regulations announced by the NSW state government last week, companies will be fined if they do not reduce greenhouse emissions by 2007 by five per cent on a per capita basis compared to 1989-90 emissions levels.

According to the NSW Minister for Energy, Kim Yeadon, the fines will be "broadly equivalent" to the estimated cost of meeting the new benchmarks. This will ensure there is no advantage in ignoring the new rules, he said.

Electricity use accounts for over 37 per cent of greenhouse emissions in Australia and according to Mr Yeadon the scheme would be equivalent to taking 2.9 million cars off the road for a year with little or no increase in household electricity bills.

Environment groups welcomed the new regulations, describing it as a decision of "international importance".

"The best thing about these benchmarks is that energy savings are recognized as a large part of the solution to reducing emissions. Electricity customers can reduce their emissions and their energy bills at the same time," said Kathy Ridge of the Nature Conservation Council.

Anti-competitive

However Harry Schaap of the Electricity Supply Association of Australia described the new rules as "anti-competitive". He said they would keep out new entrants into the NSW electricity market, which is currently dominated by state-owned companies.

The regulations will apply to any company that buys and sells electricity in NSW no matter where it is based. Currently there are companies based in parts of Australia and some overseas that are interested in selling in the state.

Dr Schaap also said that the new rules were unlikely to reduce greenhouse emissions in the state of NSW because retailers would be able to buy low-emission electricity from existing sources elsewhere in the country.

"They just haven't got the point. NSW is part of a national market. Greenhouse is a national problem," he said.

He also disagreed that the rules were anti-competitive.

"The regulations will apply equally to private and public retailers alike. Both will have to lift their game," he said.

He said the decision would lead to a growth in jobs in the renewable and energy conservation sectors. It would signal to those companies that had invested in green energy that they had made the right strategic decision.

The state government first introduced voluntary benchmarks in 1997 but retailers failed to meet them. Emissions are now 15.5 per cent above 1989-90 levels.